2.3. Maturity Structure

New issues of bonds may be structured to mature in one of two ways. First, term bonds are those in which the entire issue is scheduled to reach maturity on the same date and offers a single interest rate. A corporation that issues $20 million of term bonds with a maturity of 10 years must repay the entire $20 million principal when the bond comes due.

Second, a serial bond is a bond issue whose maturities are staggered in equal installments over a specific time period. That same $20 million might come due in $2 million installments during each of the years of the bond’s 10-year life. A serial bond with a balloon maturity has one maturity, most often the last one, which contains a disproportionately la